Amazon To Make Grocery Brands Pay For Losses On Upcoming Prime Day

In a bid to maximize profitability, Amazon will be charging “additional funding” to particular brands in the grocery category if following sales of their promotional products on Prime Day ends with a loss for the e-commerce giant. The charge is meant to “fund the profitability gap” of these products that Amazon purchases wholesale and retails on its own. As a concession, Amazon will waive the placement fee (which usually runs at $500 per deal) it typically charges to run a Prime Day promotion. All this is according to a CNBC report, which cites an email that was sent to vendors.

“This year we’ve decided not to charge placement fees for inclusion in deal events but instead we request our vendors to fund a [listing] if it’s unprofitable for the duration of the deal,” Amazon’s email to vendors stated. “If additional funding is required, it will be based off total unprofitable units sold for the duration of the deal.

Last year’s Prime Day resulted in sales of $4.19 billion worth of goods (up from $2.41 billion in 2017) with over 100 million products sold.

foodtradenews.com, from the publisher of Food Trade News, Food World, and the Grocery Industry Directory, is the authoritative source for news, data, and analysis about the retail food & drug industry in the Northeast and Southeast markets.